The Structure of Tax and Rationale of Recent Business Income Assessment in Oromia

By Teshome A.(PhD), OPEDC
Tigrai Online, July 24, 2017

Introduction

The quality and strength of the government usually evaluated based on its ability in mobilizing sufficient revenue that needed to economic development. One of the dominants sources of the government revenues is tax that would be paid by households and business people or organizations. A tax is a compulsory2 or forced payment made to a governmental unit. The major objectives of tax are to raise revenue for economic development, to foster economic growth, to attain income equality/wealth redistribution, to achieve price stability and full employment and other social development: home ownership, charitable activities, and environmental preservation.

Those countries with broad tax base and efficient tax system have been realizing fast and sustainable social development. Tax matter for economic development in both developed and developing countries. Transparent and credible tax system promotes state building by encouraging governments to be more accountable to their citizens.

Recent report reveals that the share of internal revenue from total budget has been decreasing during the last decade. In the same way the region only manages 58 percent of its GTP-II3 internal revenue plan. Such kind of poor internal revenue mobilization was strongly hampering the socio-economic development. It needs bold political commitment to bring broad based and efficient tax system. Understanding this chronic problem, the regional State has undertaken the daily business income assessment to enhance regional resources mobilization.

Those individuals who want to hold our people to their traditional and backward thinking went to divert the purpose of recent daily income assessment for their cheap political popularity. The major purposes of this brief article are to discuss the tax structure of the region and the rationale for daily income assessment conducted in 2009EC. The article consists of five sections. The second section presents the concepts of tax assessment and compliance. The third section discusses the trends and structure of the tax revenue in Oromia. The fourth section presents the rationale for daily income assessment in the region. The last section is summary.

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